An upcoming orthopedic merger will allow three practices to expand their scale at the statewide and national level.
OrthoIndiana, a merger of Indianapolis-based OrthoIndy, Evansville-based Tri-State Orthopaedics and Fort Wayne Orthopedics, is slated to launch July 1. Its leaders are already thinking about what the second half of 2025 will look like.
"This has been a conversation ongoing on our end for over two years," Paul Perry, MD, president of Tri-State Orthopaedics told Becker's. "Why is this a good idea for us? That's a complex question with a complex answer. But in a nutshell we feel that as a part of a bigger organization of like minded surgeons and physicians we will be able to provide better care to our patients in a more cost-effective fashion. We also think that the preservation of physician-led independent practice is going to require consolidation, at least for us, because it is becoming increasingly common to have these large orthopedic surgery groups. For us it's self preservation and also being able to do what we do better in a more cost effective way."
Ed Hellman, MD, president of OrthoIndy, echoed Dr. Perry, saying that remaining independent was the core of the merger.
"I think that this is a way of both playing offense and defense," Dr. Hellman said. "From a defensive perspective, it makes us bigger, makes us harder to ignore. It makes us more important to the employers and to the payers in the state and allows us to offer things that we can't when you're geographically isolated. From an offensive move, that allows us to go out to to the payers or to employers and say, 'Hey we want to be your your orthopedic solution for the state of Indiana, and we have physicians situated around the state so that that none of your employees need to try or or customers need to travel more than a relatively short distance to come to one of our providers.'"
OrthoIndiana is set to be among the top 10 largest independent orthopedic groups in the nation with 160 physicians.
With that size comes anticipated challenges, Dr. Hellman said. For instance the smaller physician groups will have to adjust to more representative governance in decision making, and OrthoIndy, which is a larger group, will need to take into account the needs of the practices outside the Indianapolis region, he said.
But each challenge also poses a new opportunity, Dr. Perry said.
"We have our individual cultures, but it's incumbent upon us to create a new culture that brings in all the best elements of what Fort Wayne orthopedics has, what Tri State Orthopedics has, and what OrthoIndy has," Dr. Perry said. "The sum total of them will be better than what we have today. It takes time to do the integration, but when we get to where we're trying to go, we'll all be better off for it."
Already OrthoIndiana has talked to organizations in the state, including Purdue University and third-party payer Carrum, to get patients referred, Dr. Hellman said. Dr. Perry said the entity also allows the groups to expand their ASC reach, which is increasingly becoming part of practicing orthopedic surgery in recent years.
OrthoIndiana follows a familiar trend. Orthopedic groups are choosing consolidation options that allow them to work independently and that don't rely on private equity investment.
Jerald Cooper, MD, president of Fort Wayne Orthopedics, said choosing to merge with OrthoIndy and Tri-State Orthopedics was a decision made with the patients and employees in mind.
"We're trying to take care of patients and give them excellent care, and the environment has made that more and more difficult as we've evolved through the last few years here," Dr. Cooper said. "I think the timing just relates to that. And as a result, we started looking to see what else we could do. Our physicians looked into [private equity and health system partnerships] and decided that wasn't the way that we wanted to go because we didn't feel that that was what was best for our patients or our employees. The idea of an aggregation has been out there, and we actually started looking at some of that prior to being in discussion with our new partners here, and it was just a matter of trying to find the right people to fit up to be able to do that."
For Dr. Hellman, the preference for physician independence is long-existing. OrthoIndy is currently part of PELTO Health Partners, and the other two merging groups will become part of that organization, he said.
"I think independent private practices provide the most efficient care and they help hold costs down by competing with some of the health systems," Dr. Hellman said. "Everywhere that health systems gobble up the private practitioners you see options diminished, you see competition diminished and you see prices rise.
"When you look at the private equity model, that one bothers me even more personally. I don't think you need somebody from a private equity company to tell you how to run your business. You certainly don't need somebody from a private equity company to take some of the profit out of your business. It's already hard enough to be margin-positive without scraping off a significant percentage of your reimbursements and sending it to [private equity]. So I think we need to just focus on getting our best minds together to work collaboratively and be as efficient as possible."